Amongst a complex tax landscape and a growing number of self-employed folk, there are plenty of myths about Self Assessment tax returns and who needs to file them.
To help people avoid costly mistakes, HM Revenue and Customs (HMRC) has debunked some of the most common misconceptions.
Myrtle Lloyd, director general for customer services at HMRC said: “We want to make sure you are clear about your tax responsibilities.
“These myth busters and our range of resources on GOV.UK can help if you are unsure if Self Assessment applies to you or think you no longer need to file a tax return.
“Just search ‘Self Assessment’ on GOV.UK to find out more.”
Myth 1: HMRC hasn’t been in touch, so I don’t need to file a tax return
HMRC said: “It is the individual’s responsibility to determine if they need to complete a tax return for the 2023 to 2024 tax year.”
There are many reasons why someone might need to register for Self Assessment and file a return, including if they:
- Are newly self-employed and have earned a gross income of over £1,000
- Earned below £1,000 and wish to pay Class Two National Insurance Contributions voluntarily to protect their entitlement to State Pension and certain benefits
- Are a new partner in a business partnership
- Have received any untaxed income over £2,500
- Receive Child Benefit payments and need to pay the High Income Child Benefit Charge because they or their partner earned more than £50,000.
More information can be found on GOV.UK and anyone who is unsure if they need to file Self Assessment can use the free online tool on GOV.UK to check.
Myth 2: I have to pay the tax at the same time as filing my return
This is false. HMRC explained: “Even if someone files their return today, the deadline for customers to pay any tax owed for the 2023 to 2024 tax year is January 31, 2025.”
Customers may also be able to set up a Budget Payment Plan to help spread the cost of their next Self Assessment tax bill, by making weekly or monthly direct debit payments towards it in advance.
Myth 3: I don’t owe any tax, so I don’t need to file a return
This is another common misconception. HMRC explained: “Even if a customer does not owe tax, they may still need to file a Self Assessment return to claim a tax refund, claim tax relief on business expenses, charitable donations, pension contributions, or to pay voluntary Class Two National Insurance Contributions to protect their entitlement to certain benefits and the state pension.”
Myth 4: HMRC will take me out of Self Assessment if I no longer need to file a return
HMRC clarifies that this is incorrect, emphasising the importance of people informing them if they’ve stopped being self-employed or no longer need to file a return, especially if they’ve reived a notice to file.
If HMRC is not notified, they will continue to send reminders and may even impose a “penalty”.
HMRC said: “Customers may not need to complete a tax return if they have stopped renting out property, no longer need to pay the High Income Child Benefit Charge, or their income has dropped below the £150,000 threshold and have no other reason to complete a tax return.”
If customers think they no longer need to complete a tax return for the 2023 to 2024 tax year, they should tell HMRC online as soon as their circumstances change. Customers can watch HMRC’s YouTube videos on stopping Self Assessment to guide them through the process.
Myth 5: HMRC has launched a crackdown on people selling their possessions online and now I will have to file a Self Assessment return and pay tax on the items I sold after clearing out the attic
Despite speculation online earlier this year, HMRC said tax rules have not changed in this area.
The tax body’s guidance states that if a person’s total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, they would not be required to inform HMRC nor pay any tax on the profits.
It explained: “If someone has sold old clothes, books, CDs and other personal items through online marketplaces, they do not need to file a Self Assessment and pay Income Tax on the sales. HMRC’s guidance on selling online and paying taxes can be found on GOV.UK.”
HMRC has a wide range of resources to help customers register for Self Assessment, including video tutorials on YouTube and help and support on GOV.UK.
